slide presentation of world trade report 2014, part E

1. WORLD TRADE REPORT
2014
Professor: OH, Joon
Seok
Presenter: KUY,
Daranita
Part E: Increased Synchronization and Globalization of
Macroeconomic Shocks

2. Content:
 Macroeconomic Volatility of Developing Countries
 Developing economies in the 2008-09 crisis
 Trade Policy reaction to the crisis

3. I. Macroeconomic Volatility of Developing Countries
 Defined as volatility in the cyclical component of
GDP
 Reduce growth
 Worsen income inequality
 The sources of this volatility in developing
countries:
 Domestic factors
 External factors (openness of a country to trade
and its integration with the global economy)

4. Trade Openness and volatility (+)
 Global Value Chain was highlighted in the
transmission of macroeconomic shocks -
Bullwhip Effect
Trade Openness and volatility (-)
 A source of diversification, multiple trading
partners  small demand shocks
 Export structure matters

5. Declining volatility over time
All the developing
countries show higher
volatility than OECD
members but there is a
clear download trend for
all the groupings
beginning around 1995

6. II. Developing economies in the 2008-09 crisis:
 Global Trade has been the transmission belt
 Dependency of development between developing and developed countries
 Developing economies have been primarily affected by the
contraction of Trade Finance.
Reassessment by
global bank
Stop financing facilities
Shortages of trade
finance

7.  Developing economies are part of the policy response leads to
faster recovery

8. III. Trade Policy reaction to the crisis:
(a) Trade policy response:
 Trade-restrictive measures
 Trade-opening measures
(b) Coordinated macroeconomic response
(c) No increase in trade protectionism

9. (a) Trade Policy Response
Trade-restrictive measure:

10. (a) Trade Policy Response
Trade-opening or Liberalization measures

11. Trade-Restricted
and
Opening Trade
• Developed G-
20 countries
(Trade remedy)
• G-20
developing
countries
(import duties,
customs
procedure)
(a) Trade Policy Response
Developed
G20 Countries
Developing

12. (b) Coordinated macroeconomic response
 The fiscal policy: Enormous assistance give to the
financial sector and some manufacturing industries
(e.g. the auto industry)
 The monetary policy: Response to crisis more
pronounced on developed countries, short-term
interest rates were reduced

13. (c) No increase in trade protectionism:
 Government gain more by sticking to trade agreement
 Policy instrument better suited to managing the failing demand
 Spread of Global Value Chains increase linkages among countries
 Raising trade-barriers would have proven to be ineffective in
promoting economic recovery

14. Summary:

15. THANK YOU!